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CyrusOne Inc CONE

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Morningstar’s Analysis

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CyrusOne Had a Good Fourth Quarter but Provides Little to Get Excited About

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

CyrusOne’s fourth-quarter revenue and adjusted EBITDA were in line with FactSet consensus estimates; the firm had a good quarter of new lease signings; and it continues to make greater inroads into Europe, which is where we think it has more opportunity. But despite a backlog and company guidance implying a reacceleration of top-line growth in 2021, the firm seems unlikely to get back to the 20% or more annual revenue growth it produced each year prior to 2020. We think those higher growth rates would be necessary to make the stock attractive considering its level of spending. We are maintaining our $65 fair value estimate and think the stock is mildly overvalued.

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Company Profile

Business Description

CyrusOne owns or operates 53 data centers, primarily in the U.S., that encompass more than 8 million net rentable square feet. It has a few properties in Europe and Asia. CyrusOne has both multitenant and single-tenant data centers, and it is primarily a wholesale provider, offering large spaces on longer-term leases. The firm has about 1,000 total customers, and cloud service providers make up about one third of its total revenue. Its largest customer, Microsoft, accounted for over 20% of 2019 revenue, and its top 10 customers generated about 50%. After cloud providers, companies in the financial services and energy industries contributed the biggest proportions of CyrusOne's sales.

2850 N. Harwood Street, Suite 2200
Dallas, TX, 75201
T +1 972 350-0060
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Hard Assets
Employees 441